I wonder what's going on here. Looks like Chalabi's joy ride may be truly over:

CNN: U.S. military raids Chalabi's home

UPDATE 5/22/04
I find myself quite speechless at the revelation that the Bush administration was conned into paying out $340,000/month to support Chalabi's Iranian spy operation. Teresa Nielsen Hayden and Josh Marshall have done a fine job of posting about this, so I'm going to pick my jaw up off the keyboard and gape dubfounded at the unimaginable stupidity of the whole Chalabi boondoggle.
A HELPFUL SUGGESTION (5/23/04): Why doesn't the CPA arrest him and extradite him to Jordan, where he has already been convicted of a crime?

Iraqi police have raided the compound of the Iraqi National Congress and the nearby home of Iraqi Governing Council member Ahmed Chalabi.

Chalabi's nephew, Salim Chalabi, said the forces entered his uncle's home, put a gun to Chalabi's head and threatened him.

CNN staff on the scene saw a group of Iraqi civilians inside the compound under guard by Iraqi police and U.S. military.

Reuters reports that in addition, the headquarters of the Iraqi National Congreess were raided:

he soldiers raided the headquarters of the Iraqi National Congress (INC) and a nearby house also used by Chalabi, and removed computers, files and equipment.

INC spokesman Haider Moussawi said the troops had wanted to arrest two party members but were told by Chalabi they were not present. Chalabi, who returned from exile after the fall of Saddam Hussein, was not detained.

The Guardian reports a possible reasons for the raid:

U.S. officials, speaking on condition of anonymity, have accused Chalabi of trying to interfere with an investigation into alleged corruption of the U.N.-run oil-for-food program, in which Saddam Hussein's government was allowed to sell oil despite international sanctions to buy food and humanitarian supplies. . . . Chalabi has complained recently about U.S. plans to retain control of Iraqi security forces and maintain widespread influence over political institutions after power is transferred from the U.S.-led Coalition Provisional Authority to an Iraqi interim administration at the end of June.

and also mentions arrests at Chalabi's house:

Some people could be seen loading boxes into vehicles, and neighbors said some members of Chalabi's entourage were taken away.

Newsweek's article, posted just prior to the raid, has a whole lot more on the background of the falling out between Chalabi and the Pentagon:

Pentagon officials sayÝ the decision by Deputy Defense Secretary Paul Wolfowitz to cut off funding this week for the Iraqi National Congress was made because U.S. financial backing of an Iraqi political party had become ÅginappropriateÅh in light of efforts to set up a new Iraqi government on June 30. But the funding decision follows disclosures that INC leader Ahmad Chalabi and some of his aides supplied sensitive information about U.S. security operations in Baghdad to the Iranian government, according to U.S. intelligence sources.

The decision also coincides with the launch, by Coalition authorities in Iraq, of a wide-ranging investigation into allegation that INC leaders engaged in extortion and other corrupt activities inside Iraq. An INC spokesman said that the group and its leader had not been informed about a corruption investigation or been contacted about it by Coalition authorities. The spokesman also denied that anyone from the group had supplied sensitive information to Iran.

UPDATE: The NYT now has the story:

Reporters who entered the office compound after the departure of the Americans and Iraqi officers found a scene of destruction. Computers had been ripped out of the walls, furniture had been overturned, doors broken down and framed photographs of Mr. Chalabi smashed. Aides to Mr. Chalabi said members of the raiding party had helped themselves to food and beverages from the refrigerator.

and regarding the raid on the INC headquarters, the NYT had this tidbit:

Ali Sarraf, the finance director of the Iraqi National Congress, describe a tableau of brutality. "We offered them the keys and they showed us guns," he said. "They kicked the door down."

Standing amid the debris in the organization's offices, he said: "Bremer is panicking. This is about settling things with Dr. Chalabi."